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January 26, 2010

Author Guest Post: Jay Slosar

A National Health Care Plan Would Improve the Economy

Nothing irritates conservatives more than when Michael Moore refers to free healthcare. Obviously, it is not free, and the distraction only fuels the anti-liberal attacks that Moore takes on. Unfortunately, the political attacks don't allow us to get down to the costs and a comprehensive cost benefit analysis comparing today's health "system" and a proposed national health care plan.

Nothing represents more clearly our insistence on free market principles and competition than the way healthcare is delivered today. This is evident in every political debate for both parties. The Republicans bash "government run healthcare", even though their party passed the Medicare bill in 2003. The Democrats are proposing mixed models, trying to preserve the godlike free market and profiteering of the major players involved. While Medicare provides medical benefits for a dramatically growing population that is aging and living longer, the rest of the working folks pretty much need to rely on their employers for health coverage. But the number of people privately insured is not as big as you think. In fact, about 60% of healthcare is publicly funded.

It has been stated often that the barriers to changing our health delivery system are political, and many have advocated an "incremental" approach. But after about 20 years of social/economic experiments within the free market, it's hard to imagine that anything else can be tried. The upward trend of costs continues unabated. Health costs rose 7.2% in 2004 and another 6.9% in 2005. The 6.9% figure is being heralded as a success, since it was the smallest increase since 1999. The 2006 data is at an increase of 6.1 percent, a pace that was maintained in 2007. The health share of gross domestic product (GDP) is expected to hold steady in 2006-2007 before resuming its historical upward trend. Experts predict that healthcare spending will reach 19.6 percent of GDP by 2016. The nation spent almost $2 trillion dollars on medical care in 2005. This accounts for about 16% of all spending. Average cost per person varies by report, but is now close to a staggering figure of around $6,700. All of this with 45 plus million still uninsured.

These exponential growth figures come after years of "Managed Care". Managed Care was supposed to be the mechanism to control health costs. What is so remarkable is that there was never any solid evidence that it worked. Even as far back as 1989, the Institute of Medicine established a task force to investigate utilization management by third parties and found no evidence managed care reduced costs. But that didn't stop the market place from the irony of having the private sector regulate health care. Managed Care can now be evaluated as a social/economic or Social Psychology experiment gone awry. When healthcare experts say it works, it reminds me of that old joke. The operation was a complete success, but the patient died.

Health advocates have stated the obvious for years. The amount of waste in the U.S. in healthcare paperwork and bureaucracy costs more in dollars than it would take to provide health coverage for all of the 40 million plus who are uninsured. In other words, pure admin overload, if eliminated, could save enough money to solve the problem of the uninsured. Within the 60-40 public/private split of U.S. healthcare funding, what you hear most about is the misconception that the private sector is more efficient than the public sector. For years, the public Medicare system has had administrative costs of around 3%. More than 96 cents of each dollar is spent on direct care for Medicare recipients. Private sector admin estimates are around 15%. Most Americans would never accept the argument that the federal government is more efficient than the private sector in delivering healthcare. Medicare gets a bad rap, tainted by the global opinion that government run means inefficient and that the private sector and for profit mode is always best. You don't have to be a Nobel Prize economist to ask the obvious question. If health insurance premiums are dramatically increasing, and doctors and hospitals are being paid the same or even less, where is the money going?

Believe it or not, there is available research which provides a cost benefit analysis of health costs. In 2003, the state of California instituted The California Health Care Options Project. This was an integrated study of nine different models of health care reform proposed by health care policy experts. This included several organizations and professors from University of California campuses in Los Angeles, San Diego, Berkeley, and San Francisco. Each of the nine models proposed were then subjected to a microsimulation by the Lewin Group. These nine models, when viewed overall, broke down as follows. Six models and proposals were expansions of the current system and could then be described as incremental models-seeking reform in continued small steps. The other three models were comprehensive proposals of which two were single payer models, and the other was a health service model. The final simulation analysis by the Lewin Group, showed that it was these three models that would provide comprehensive coverage for everyone and that were projected to save California's citizens billions of dollars in healthcare costs. The other six incremental reform models fell short, leaving in place many of the policies that aren't working well. All of these models were projected to increase costs to Californians. One of the six models proposed was a combination plan of an employer mandate and a single public program for everyone else. While this combination plan came close to meeting the goals of comprehensive coverage, it turned out to be the most expensive proposal put forth. Any systematic and data based analysis is clear, a comprehensive model based on a single payer system would save billions and provide care to almost all citizens.

High health costs in an employer based system are killing our economy. In fact, employer sponsored healthcare is a huge federal tax break. If employees had to claim their employee healthcare "benefits" as income, it is estimated they would be paying about $126 billion dollars in federal income tax. In other words, private sector employer sponsored healthcare is really part of a government backed health system. A National Healthcare Plan, by spreading out the costs to everyone, would take the monkey off an employer's back. What will business do without this huge expense and increased profits? Might they create jobs? Expand their business? Lower prices? Of course, they will have to pay taxes on their increased profits, thus contributing to improving our unacceptable budget deficit. Herein lies the seismic conclusion: A National Healthcare Plan would stimulate and improve the economy. It would do this by creating jobs, promoting business expansion, lowering prices, reducing the budget deficit, and increasing our global competitiveness.

It is unlikely you will hear any of this mentioned by any accomplished reporter, or major media network during the health debate. After all, a National Healthcare Plan is just not politically viable.

J.R. Slosar is a clinical psychologist in private practice in Irvine, CA, and an adjunct assistant professor at Chapman University, Orange, CA. In the past 25 years he has provided direct clinical and consulting services in a variety of diverse settings. He is the author of The Culture of Excess: How America Lost Self Control and Why We Need to Redefine Success (ABC-CLIO, Nov. 2009) Visit http://www.cultureofexcess.com or call 949-851-8277 for more information.